Intervention(s)
The capital injection intervention is a component of a broader USAID Growth Poles initiative focused on specific anchor firms. These firms are expected to serve as catalysts for economic development, aiming to mobilize investments and result in positive impacts for nearby communities. The VSLA capital injections are intended to help households in nearby communities to tap into the new economic opportunities created by the Growth Pole initiative. In total, there are more than 15 growth poles (anchor firms) in which USAID investments take place. The capital injections that are part of this trial take place in communities that are in the vicinity of three growth poles: Llovo Dwangwa in Nkhotakota district located in the Central region of Malawi; Tropha in Rumphi and Mzimba districts in Northern region; and Pyxus in Dowa and Kasungu districts in the Central region.
The VSLA capital injection intervention is implemented by Women's Legal Resources Centre (WOLREC), a Malawi-based NGO, in collaboration with Palladium International, a global consulting firm with an operational presence in Malawi. The intervention grants a sum of $70 PPP per member in the VSLA group to expand their loan sizes. To qualify for the capital injection, VSLAs must adhere to specific criteria, including a 4-month loan term and an interest rate of at most 10 percent (equivalent to approximately 33 percent on an annualized basis). This capital injection program complements the regular VSLA group loans, which the groups will continue to provide under their original terms, typically characterized by higher annualized interest rates than what is offered through the capital injection scheme. Additionally, the groups will be equipped with local bank accounts to enhance security and establish a connection to formal financial services. To further support the initiative, participants will receive training in financial literacy, as well as in business and VSLA management.
The capital injections and trainings will be rolled out between November and December 2024, i.e., immediately after the baseline survey.